The paradox of low jobless claims and high unemployment

Ho hum. Another week and another jobless claims report that’s expected to show layoffs remain near a modern-record low.

Economists polled by MarketWatch expect virtually no change in initial claims in the first week of September. Claims are forecast to dip to 301,000 from 302,000.

Companies aren’t laying many people off these days because the economy is growing and firms are already extremely lean. Low layoffs have helped push net job creation to the highest level since the recession ended in mid-2009.

Since the early 1970s, weekly jobless claims have seldom fallen below 300,000 mark for an extended period. People are always losing jobs for one reason or other, and that’s part of the normal “friction” in any labor market.

What’s different now is the the high number of unemployed, especially the long-term jobless, still looking for work in the U.S. The unemployment rate stood at 6.1% in July, much higher than the 4.6% average that prevailed from 2006-2007 when claims were at a similarly low level.

The number of people out of work six months or longer, meanwhile, totaled 2.96 million in July. Although the pool of long-term unemployed has shrunk significantly, it’s still more than twice as high compared to the month before the Great Recession started.

Also on Thursday afternoon, the Treasury is likely to report that the federal government showed a smaller deficit in August compared to same month in 2013. With one month to go in the fiscal year, Washington is on track to post its smallest annual deficit since 2008.